016-14-05 Ark. Code R. § 5
The Financial Guidelines for Purchased Services (Financial Guidelines) provides the rules and regulations governing financial control of purchase of services funds administered by the Department of Human Services (DHS), Office of Finance and Administration (OFA). The provisions of Chapters 1000 through 7000 are applicable to all funding sources unless exceptions or additions appear in regulations governing specific funding sources.
The following state and federal laws, regulations, and policy govern the operation of the purchase of services program.
The major federal regulations governing the operation of the programs are:
NOTE:
CFR regulations may be found at the following website:
www.gpoaccess.gov/cfr/index.html.
Federal regulations and OMB circulars may be found at the following website:
The State of Arkansas regulates the operation of DHS through the enactment of legislation pertaining to the funding of DHS and through legislation concerning the practices of all state agencies in areas of personnel, accounting, and prescribed procedures for issuing rules and regulations.
Contractors should refer questions to their assigned Administrative Compliance Officer(ACO) within CSS and division or office staff should refer questions to their assigned liaison within CSS. Any unanswered questions will be referred to the CSS Assistant Director. Any question touching on legal issues will be referred by CSS to the Office of Chief Counsel (OCC). Except in an emergency, all such inquiries must be submitted to CSS in writing. The reply will be made in writing or, if an oral response is given, it will be confirmed in writing
Contracts for technical services are governed by the Arkansas Procurement Law, applicable statutes and regulations, and DHS Administrative Procedures Manual, Chapter 604.
Interlocal agreements are authorized under Arkansas Code Annotated 25-20-104 to facilitate cooperation and sharing of resources at the local level between state agencies.
Grants are awards of resource assistance to promote a program or goal of public benefit, as authorized by the funding agency. The nature of the grant, the eligible recipients, the method of award, and the terms and conditions depend on the specifics of the statute that created the grant program (if publicly funded) and the implementing regulations. Grants are more appropriate than contracts when the principal purpose is more generalized public support, stimulation, or capacity-building.
Medicaid provider agreements establish an individual or entity as a Medicaid provider and are specific to each service being provided. Medicaid provider agreements are managed by the Division of Medical Services (DMS) and governed by Medicaid regulations and rates.
These agreements are executed to provide special nutrition programs for day care centers, day care family homes, private schools, and summer school programs.
Construction contracts are developed and approved in accordance with Arkansas Building Authority (ABA) regulations.
A standard flat fixed rate is established by a cost study and does not require individual provider budget justification in the contract.
For a Range of Rates, contractor rates should fall within the range of allowable rates shown on the approved rate schedule. When a range of rates is established by the cost study, each contractor's rate will be set and justified by the provision of a budget and other narrative justification in the contract. Amendments to revise rates amended within this range are completed on a prospective basis from the effective date of the contract amendment.
NOTE:
* The division/office is responsible for maintaining sufficient supporting documentation pertaining to the cost study and for making it available to authorized individuals upon official request.
* Only allowable costs, as outlined in the applicable OMB circulars, shall be used to determine fixed rates. Rates will (may) be adjusted if unallowable costs are used to determine fixed rates.
There are a variety of approved methods used to determine an estimate of reasonable and necessary expenditures per unit of service being purchased. These include, but are not limited to, the following
Two possible budget formats include the following:
A full disclosure budget includes all agency-wide expenditures related to all service program areas. Even those considered unallowable for reimbursement under specific funding sources are to be included. All projected sources of revenue and amounts funded, including client fees and program income, are shown.
A full disclosure budget provides a more complete picture of the contractor's/grantee's financial status and stability than does a program specific budget.
A program specific budget includes only those allowable expenses allocated to a program component or service(s) directly funded by DHS through a contract or grant.
NOTE:
* The division/office is responsible for maintaining budgets or other supporting documentation pertaining to the establishment of Final Negotiated rates and for making it available to authorized individuals upon official request.
* Published or community rates are rates that have been advertised in a newspaper, pamphlet, price list, etc. or posted by the provider and accepted by the community for all clients for services. Provider must provide evidence of such publication, advertisement, or posting.
Actual cost reimbursement is based on a complete itemized listing of allowable program expenses to be purchased. The total itemized listing should equal the total DHS funding in the contract.
Notation for each line item identifying it as compensation or reimbursable expense
If the budget is being used to calculate a unit rate, project the total number of units for each service funded wholly or in part under the contract. Include all units provided to clients for each service whether or not they are paid by the contract. Divide the total costs for the service by the projected number of units of service to compute the unit rate. (See Appendix C.)
If the cost allocation is being used to calculate a unit rate, project the total number of units for each service funded wholly or in part under the contract. Include all units provided to clients for each service whether or not they are paid by the contract. Divide the total costs for the service by the projected number of units of service to compute the unit rate. (See Appendix C.)
* " Listing of services "are Medicaid reimbursable services. Due to the rates/unit/service definitions for Medicaid reimbursable services being subject to change, (division/office)will use the current Medicaid rates for any Medicaid reimbursable service. The (division/office)rates will be changed after official notice is received from the Division of Medical Services."
Amendments to contracts/grants are required when any element on the contract/grant form or any of the legal attachments is revised to the extent that it materially affects the contractor/grantee or DHS in any way. Minor revisions or administrative corrections that affect only the internal administration of a contract do not require an amendment; these may be accomplished as a Change action. Refer to Appendix B (DHS Contract Requirements) for specifics concerning the requirements for amendments.
The matching requirement may be satisfied by any one or a combination of the following methods unless specific funding source restrictions apply.
The contractor is required by law and by contractual agreement to maintain an adequate financial system which records and documents all transactions affecting assets and equities. Financial records must report accurately and completely all fiscal data according to generally accepted accounting principles. The financial system must be comprehensive enough to show an adequate audit trail. (Audit trail refers to the capability of the financial records to provide documentary evidence of every financial transaction of the contractor.)
Authorized agents of the United States Government and appropriate DHS staff shall have full access to any financial records and all supporting documents for the purpose of conducting an audit or fulfilling any other official review requirements. Other disclosure will be made only as required by state and federal laws and regulations.
Contractors shall ensure that documents are on file which verify that billed services were actually delivered to eligible clients. Depending on the type of service rendered, one or more of the documentation methods listed in the following sections may be used.
As a minimum requirement, a residential program must maintain a weekly or monthly attendance sheet indicating the name of the client and each day the client was a resident of the program. A record of specific components of the program delivered to each client is required either as notes in case records or in rosters of residents attending a specific component such as group therapy. Case notes or rosters must be signed and dated by the person delivering the service.
To ensure that the state meets its obligations under the Omnibus Budget Reconciliation Act (OBRA), all contractors/grantees are required to comply with the "DHS Audit Guidelines". Compliance or noncompliance with the audit requirement shall be indicated by OCC Audit Section on the Provider Audit Sign-Off Sheet (PASOS).
The state agency administering the purchase of service agreement must maintain the authority and responsibility for overall supervision, control, and oversight of purchase of services activities. Therefore, in the best interest of the contractors/grantees and the state, circumstances may indicate a need for various other types of review activities. Such reviews may encompass a variety of procedures including, but not limited to, service to billing reviews, limited financial management audits, management reviews, eligibility verification reviews, programmatic compliance reviews, and special investigations.
The purpose of the Administrative Hearing Process is to provide a mechanism by which a provider may appeal audit findings, disallowances/recoupments, or any other action procedure is subject to the authority of the State Purchasing Director or his designee to resolve or settle a dispute as provided in Ark. Code Ann. § 19-11-246 or according to the State Plan or federal requirement.
submitted to OFA Chief Fiscal Officer or designee for approval. A copy of the signed waiver should be attached to the contract/grant when it is submitted for review.
the OFA Chief Fiscal Officer or designee.
approval must be submitted to the OFA Chief Fiscal Officer or designee. A copy of the signed approval should be attached to the contract/grant when it is submitted for review.
from the OFA Chief Fiscal Officer or designee.
The primary bases for the following cost principles include:
♦ OMB Circular A-122, "Cost Principles for Non-Profit Organizations"
* OMB Circular A-21, "Cost Principles for Educational Institutions"
* OMB Circular A-87, "Cost Principles for State, Local and Indian Tribal Governments"
* Social Services Block Grant Program Manual
* State Accounting Procedures Manual
Although the OMB Circulars pertain to federal funds (and to state and other funds that are being used as cost sharing with federal funds), DHS expands their requirements to cover all contracts and grants, regardless of the funding source, in an effort to further prudence, consistency, and standardization. NOTE: Certain funding sources may have requirements more stringent than those outlined below, in which case the specific funding source requirements take precedence (i.e., Social Services Block Grant funding). In addition, the contracting DHS division/office may, at their discretion, impose more stringent requirements for a particular service or program.
Waivers to this policy may be considered, on a case by case basis, and only when the implementation of the waiver would not be prohibited by state or federal legislation.
Costs which are generally allowable
Costs which are generally unallowable
Failure to mention a particular item or cost does not imply that it is either allowable or unallowable. Each budget item requested will be considered on the merit of its contribution to the program. This section provides general guidelines which are applicable to every funding source. When a line item states that prior approval must be obtained from DHS, requests for approval shall be initiated by the contract/grant developer. (See Section 6200 for procedures to obtain such approval.)
NOTE: Refer to the applicable OMB circulars listed in Section 7100 for a more detailed explanation of allowable and unallowable costs.
The following are applicable to all funding sources unless different terms are specifically required by individual funding sources or unless a waiver is approved by DHS. Other items may be allowable in accordance with GAAP.
Note: Advertising and public relations costs incurred for fund raising or solely to promote the organization are unallowable.
The cost of the required annual independent audit of all program-related costs is allowable.
Costs of bonding required pursuant to the terms of the award are allowable.
Costs of bonding required in the general conduct of the funded program are allowable to the extent that such bonding is in accordance with sound business practice and that the rates and premiums are reasonable under the circumstances.
Costs associated with building space and related facilities used for the benefit of the program are generally allowable. (See Depreciation and Use Allowance and Rental Costs.) Funds may not be utilized for the purchase, construction, or permanent improvement of any building or other facility, unless specifically approved in advance by the funding source.
Costs incurred for telephone services, local and long distance telephone calls, telegrams, postage, mobile phones, faxes, pagers, electronic or computer transmittal services and the like are allowable if necessary for the performance of the agreement.
Compensation for the use of buildings, other capital improvements, and equipment necessary to the performance of the agreement may be made through depreciation or use allowances. In general, a combination of the two methods (depreciation and use allowances) may not be used in connection with a single class of fixed assets (ex., buildings, office equipment computer equipment, etc.)
The computation of depreciation or use allowances shall be based on the acquisition cost of the assets involved. The acquisition cost of an asset donated to the organization by a third party shall be its fair market value at the time of the donation, (see. Donations)
The computation of use allowances or depreciation shall exclude:
Where depreciation method is followed, the period of useful service (useful life) established in each case for usable capital assets must take into consideration such factors as type of construction, nature of the equipment used, technological developments in the particular program area, and the renewal and replacement policies followed for the individual items or classes of assets involved. The method of depreciation used to assign the cost of an asset or group of assets to accounting periods shall reflect the pattern of consumption of the asset during its useful life. In the absence of clear evidence indicating that the expected consumption of the asset will be significantly greater or lesser in the early portions of its useful life than in the later portions, the straight-line method shall be used. Depreciation methods once used shall not be changed unless approved in advance by DHS. When the depreciation method is introduced for application to assets previously subject to a use allowance, the combination of use allowances and depreciation applicable to such assets must not exceed the total acquisition cost of the assets. When the depreciation method is used for buildings, a building's shell may be segregated from each building component and each item depreciated over its estimated useful life, or the entire building may be treated as a single asset and depreciated over a single useful life.
Where the use allowance method is followed, the use allowance for buildings and improvement will be computed at an annual rate not exceeding two percent of acquisition cost. The use allowance for equipment will be computed at an annual rate not exceeding six and two-thirds percent of acquisition cost. When the use allowance method is used for buildings, the entire building must be treated as a single asset; the building's components cannot be segregated from the building's shell. The two percent limitation, however, need not be applied to equipment which is merely attached or fastened to the building but not permanently fixed to it and which is used as furnishings or decorations or for specialized purposes. Such equipment will be considered as not being permanently fixed to the building if it can be removed without the need for costly or extensive alterations or repairs to the building or the equipment. Equipment that meets these criteria will be subject to the six and two-thirds percent equipment use allowance limitation.
Charges for depreciation or use allowances must be supported by adequate property records and physical inventories must be taken at least once every two years (a statistical sampling basis is acceptable) to ensure that assets exist and are usable and needed. When the depreciation method is followed, adequate depreciation records indicating the amount of depreciation taken each period must also be maintained.
The value of donated or volunteer services, donated goods and donated use of space are not allowable as reimbursable costs. Their value may, however, be used to meet cost sharing or matching requirements under certain circumstances. (See, Depreciation and Use Allowances)
The costs of employee information publications, health or first-aid clinics, and/or infirmaries, recreational activities, employees' counseling services, and other expenses incurred in accordance with the organization's established practice or custom for the improvement of working conditions, employer-employee relations, employee morale, and employee performance are allowable to the extent that they relate to the performance of the agreement. Such costs will be equitably apportioned to all activities of the organization. Income generated from any of these activities will be credited to the cost thereof unless such income has been irrevocably set over to employee welfare organizations.
Equipment is defined as an article of nonexpendable, tangible personal (non-real estate) property having a useful life of more than one year. Expenditures for equipment with an acquisition cost of less than $2,500tQO are allowable.
Purchase of computer equipment through a PCSeilleie contract requires review by and an approval memo from the DHS Office of Systems and Technology prior to the development of the contract.
Equipment expenditures of $2,500tOO or greater are considered capital expenditures and are unallowable unless prior approval is obtained from DHS.
Indirect costs are costs incurred by an organization that are not readily identifiable with a particular project or program but are necessary to the operation of the organization and the performance of its programs. The costs of operating and maintaining facilities, depreciation and administrative salaries are examples of the types of costs that are usually treated as indirect costs.
Indirect costs should be allocated to the programs or services in a manner which will equitably distribute the indirect costs in proportion to the benefits derived. Unallowable costs should be adjusted out before allocating the costs. A cost may not be allocated as an indirect cost if any other cost incurred for the same purpose, in like circumstances, has been allocated as a direct cost.
Certain funding sources limit the amount of indirect costs that may be allowed. When the amount allowable under the funding source is less than the amount shown in the budget as indirect costs, the amount not recoverable may not be shifted to another federal or state funding source without prior written approval.
In general, costs of insurance and indemnification required or approved and maintained pursuant to the agreement are allowable to the extent that the types and amount of coverage are in keeping with sound business practice and the rates and premiums are reasonable for the circumstances.
Costs incurred in maintaining satisfactory relations between the organization and its employees, including costs of labor management committees, employee publications, and other related activities, to the extent they relate to the performance of the agreement, are allowable.
Costs incurred for necessary maintenance, repair, or upkeep of buildings and equipment (including federal property unless otherwise provided for) which neither add to the permanent value of the property nor appreciably prolong its intended life, but keep it in an efficient operating condition, are allowable. Costs incurred for improvements which add to the permanent value of the buildings and equipment or appreciably prolong their intended life shall be treated as capital expenditures.
The cost of materials and supplies necessary to carry out the objectives of the program is allowable. Purchases must be charged at the actual cost after deducting cash discounts, refunds, rebates, allowances and material returned to vendor.
Where federally-donated or furnished materials are used in performing the agreement, such materials will be used without charge.
Costs associated with meetings and conferences, the primary purpose of which is the dissemination of technical information, are allowable. This includes the cost of renting facilities, meals, speakers' fees, and other items incidental to such meetings and conferences, provided that they meet the general test of allowability (see, General Provisions). Refer to Participant Support Costs and Entertainment Costs for additional information.
To the extent that these costs are identifiable with a particular program, they should be charged to that program.
Necessary and reasonable expenses incurred for routine and homeland security to protect facilities, personnel, and work products are allowable. Such costs include, but are not limited to, wages and uniforms of personnel engaged in security activities; equipment; barriers; contractual security services; consultants; etc. Capital expenditures for homeland and plant security purposes are subject to the criteria in the Equipment and Other Capital Expenditures section of the applicable OMB circular.
Costs of preparing proposals for potential federal awards are allowable, but only to the extent that they have direct relevance to the performance of the agreement and only if the terms of the contract/grant specifically allow them. Proposal costs should normally be treated as indirect costs and should be allocated equitably to all activities of the organization.
Costs incurred for ordinary or normal rearrangement and alteration of facilities are allowable. Special arrangement and alteration costs incurred specifically for the project are allowable with the prior written approval of DHS.
Costs incurred in the restoration or rehabilitation of the organization's facilities to approximately the same condition existing immediately prior to commencement of the agreement, less costs related to normal wear and tear, are allowable.
Costs of "help wanted" advertising are allowable provided that the size of the staff recruited and maintained is in keeping with workload requirements and to the extent the costs relate to the performance of the agreement. Where the organization uses employment agencies, costs not in excess of standard commercial rates for such services are allowable.
In general, taxes which the organization is required to pay and which are paid or accrued in accordance with GAAP are allowable. Refer to the applicable OMB circular for exceptions.
Costs of preparation and maintenance of a program of instruction including but not limited to on-the-job, classroom, and apprenticeship training, designed to increase the vocational effectiveness of employees, are allowable to the extent they relate to the performance of the agreement. These costs include training materials, textbooks, salaries or wages of trainees (excluding overtime compensation which might arise therefrom), and (1) salaries of the director of training and staff when the training program is conducted by the organization, or (2) tuition and fees when the training is in an institution not operated by the organization.
For specifics concerning part-time education at an undergraduate or post-graduate college level and other issues related to training, see the applicable OMB Circular.
Travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by employees traveling on official business.
The maximum allowable must not exceed the allowable limits for state employees on official business except with prior written approval from DHS. See the State of Arkansas Travel Regulations on the Department of Finance and Administration website www.arkansas.gov/dfa/accounting for specific rules, regulations and procedures regarding allowable travel costs.
The costs defined below are generally unallowable unless specifically stated as allowable by the specific funding source or unless a waiver is approved by DHS. Refer to the applicable OMB circulars
Advertising and public relations costs incurred for fund raising or solely to promote the organization are unallowable.
The cost of alcoholic beverages is unallowable.
Bad debts, including losses arising from uncollectable accounts and other claims, related collection costs, and related legal costs, are unallowable.
Capital equipment is defined as an article of nonexpendable, tangible personal (non-real estate) property having a useful life of more than one year and an acquisition cost of $2,500.00 or more. Expenditures for capital equipment or property are unallowable unless allowed by the funding source and approved in advance by DHS.
If a funding source allows the purchase of capital assets and DHS approves, title to the equipment or property shall be vested in DHS unless DHS or the applicable federal grantor agency specifically agrees in writing to a title transfer or other disposition. No department property may be sold, transferred, or used in another program without the consent of DHS. All department property will be clearly marked and properly maintained. The contractor/grantee will reimburse DHS for loss or damage to DHS property unless DHS directs otherwise.
Contributions to a contingency reserve or any similar provision made for events the occurrence of which cannot be foretold with certainty as to time, intensity, or with an assurance of their happening, are unallowable.
Contributions and donations for any purpose, when made by the organization, are unallowable.
Deposits made on such items as telephone or utilities are unallowable without prior written approval of DHS. These amounts are refundable at a later date and, as such, are generally considered assets of the program.
Costs of entertainment, including amusement, diversion, and social activities, and any costs directly associated with such costs, such as tickets to shows or sports events, meals, lodging, rentals, transportation and gratuities are unallowable. This unallowability does not apply to the provision of socialization services, congregate meal services, field trips, mentor services, and diversion or social activities to clients.
Costs of fines and penalties resulting from violations of or failure of the organization to comply with federal, state, and local laws and regulations are unallowable.
Profits and losses of any nature arising from the sale or exchange of capital assets are unallowable except in highly specific circumstances as detailed in the OMB Circulars.
Costs of goods or services for personal use, housing, and personal living expenses for the organization's employees are unallowable regardless of whether the cost is reported as taxable income to the employees. (See exception in Compensation for Personnel Services)
Gratuities, tips, and similar costs are unallowable.
Interest, investment management, and fund raising costs are generally unallowable except in highly specific circumstances as outlined in the OMB Circulars.
Costs of idle facilities or idle capacity costs such as maintenance, repair, housing, rent, and other related costs are generally unallowable.
The cost of legal defense of criminal actions, anti-trust suits, or any other action brought by any governmental unit and the prosecution of claims against the government is unallowable.
Lobbying costs are generally unallowable except in highly specific circumstances as detailed in the OMB Circular.
Any excess of costs over income under one grant or contract is unallowable as a cost of any other grant or contract.
Expenditures in connection with establishment or reorganization of an organization are unallowable except with prior written approval of DHS.
Costs associated with obtaining patents are generally unallowable except in highly specific circumstances as detailed in the OMB Circulars.
In addition to the unallowable costs listed in 7300, the following costs are unallowable for Social Services Block Grant funding:
APPENDIX A
CHART OF ALLOWABLE METHODS FOR COST ALLOCATION
The following are suggested methods for distributing expenses to cost centers or activities when the facility provides more than one service or activity. Any method of distribution which will produce an equitable distribution of cost may be used. In selecting one method over another, consideration should be given to the additional effort required to achieve a greater degree of accuracy.
Method of Allocation Number of clients | Examples of Applicable Expenses ALL Program and Administrative Expenses |
Direct charge to department or cost center | ALL Program expenses |
Square footage | Rental, Building Depreciation, Insurance, Maintenance and Repair, Material and Supplies, Taxes, Utilities |
Number of employees | Communication, Insurance, Material and Supplies, Memberships, Meetings and Conferences, Subscriptions, Travel |
Time and effort, supported by appropriate | Salaries, Fringe, time distribution records |
Total dollar volume | Accounting, Auditing |
Number of transactions processed | Accounting, Auditing |
Direct hours | Accounting, Auditing |
Number of calls | Communication |
Number of miles | Travel, Training |
Number of meals | Food |
APPENDIX B CONTRACT REQUIREMENTS
ACTUAL COST -Reimbursement is based on actual expenditures outlined in a budget or cost allocation plan
CONTRACT REQUIREMENTS | |
Original Contract | * Itemized listing of allowable program expenses to be purchased and justification with each line item designated as compensation or reimbursable NOTE: Total itemized listing must equal total DHS funding. |
Amendment * change in funding | * Revised itemized listing of allowable program expenses to be purchased with each line item designated as compensation or reimbursable NOTE: Total of revised itemized listing must equal total DHS funding. |
Amendment * change in funding * change in contract period | * Revised itemized listing of allowable program expenses to be purchased with each line item designated as compensation or reimbursable, OR * Additional itemized listing for the period of extension, with each line item designated as compensation or reimbursable NOTE: Total itemized listing(s) must equal total DHS funding. |
Amendment * change in contract period | * None to itemized listing(s), if there are no changes in compensation and reimbursable amounts NOTE: Purpose must clearly state that expenditures will be prorated based on last approved budget on file. |
Amendment * change in total compensation or total reimbursable amounts * no other changes | * Revised itemized listing of allowable program expenses to be purchased with each line item designated as compensation or reimbursable NOTE: Total itemized listing must equal total DHS funding. |
NOTE: REFER TO SPECIFIC PROGRAM DESCRIPTIONS FOR ANY ADDITIONAL BUDGET REQUIREMENTS OR DOCUMENTATION TO BE MAINTAINED BY THE PROGRAM AGENCY
ACTUAL COST -Reimbursement is based on actual expenditures outlined in a budget or cost allocation plan andincludesNegotiatedorFixed Rates
CONTRACT REQUIREMENTS | |
Original Contract | * Approved rate schedule, AND * Itemized listing of reimbursable expenses |
Amendment * change in funding | * Revised itemized listing of reimbursable expenses, if applicable |
Amendment * change in rates | * Approved revised rate schedule * DHS 1951 signed by Governor for rate increase, if applicable |
Amendment * change in funding * change in rates * change in contract period | * Approved revised rate schedule * DHS 1951 signed by Governor for rate increase, if applicable * Revised itemized listing of reimbursable expenses, if applicable, OR * Additional itemized listing for the period of extension |
Amendment * change in funding * change in contract period | * Revised itemized listing of reimbursable expenses, if applicable, OR * Additional itemized listing for the period of extension |
Amendment * change in contract period | * None to itemized listing and rate schedule, if there are no changes in compensation or reimbursable amounts NOTE: Purpose must clearly state that expenditures will be prorated based on last approved budget on file. |
NOTE: REFER TO SPECIFIC PROGRAM DESCRIPTIONS FOR ANY ADDITIONAL BUDGET REQUIREMENTS OR DOCUMENTATION TO BE MAINTAINED BY THE PROGRAM AGENCY
FIXED RATE -Reimbursement is based on a DHS approved rate schedule, which is based on an approved DHS cost study or federal rate schedule.
CONTRACT REQUIREMENTS | |
Original Contract | * Approved rate schedule, including: 1. service name 2. service code 3. unit rate 4. service unit definition |
Amendment * increase/decrease in rates * no change in funding * no change in contract period | * Revised approved rate schedule * DHS 1951 signed by Governor for rate increase |
Amendment * increase/decrease in funding * no change in rates * no change in contract period | * None to rate schedule NOTE: Purpose should clearly state that the only change is in funding. |
Amendment * increase/decrease in funding * extension in contract period * no change in rates | * None to rate schedule NONE: Purpose should clearly state that the only changes are in funding and contract period. |
Amendment * increase/decrease in funding * increase/decrease in rate | * Revised approved rate schedule * DHS 1951 signed by Governor for rate increase |
Amendment * extension in contract period * no change in funding * no change in rates | * None to rate schedule NOTE: Purpose should clearly state that the only change is in contract period. |
NOTE: REFER TO SPECIFIC PROGRAM DESCRIPTIONS FOR ANY ADDITIONAL BUDGET REQUIREMENTS OR DOCUMENTATION TO BE MAINTAINED BY THE PROGRAM AGENCY
FINAL NEGOTIATED RATE -Reimbursement is by rates based on reasonable and necessary expenditures negotiated and approved between the provider and DHS program agency
CONTRACT REQUIREMENTS | |
Original Contract | * Rate schedule, including: 1. service name 2. service code 3. unit rate 4. service unit definition 5. method of calculating unit rate * Projection of number of units per service, if applicable |
Amendment * change in funding * no other changes | * Revised projection of number of units per service, if applicable |
Amendment * change in rates * no other changes | * Revised rate schedule * Revised projection of number of units per service, if applicable, * DHS 1951 signed by Governor, if rate increase, if applicable |
Amendment * change in funding * change in rates * change in contract period | * Revised rate schedule * Revised projection of number of units per service, if applicable * DHS 1951 signed by Governor, if rate increase, if applicable |
Amendment * change in funding * extension in contract period * no change in rates | * Revised projection of number of units per service, if applicable |
Amendment * extension in contract period * no other changes | * None to rate schedule NOTE: Purpose should clearly state that the only change is in contract period. |
NOTE: Most negotiated rate contracts are allocated to compensation
NOTE: REFER TO SPECIFIC PROGRAM DESCRIPTIONS FOR ANY ADDITIONAL BUDGET REQUIREMENTS OR DOCUMENTATION TO BE MAINTAINED BY THE PROGRAM AGENCY
SCHEDULED REIMBURSEMENT -Reimbursement is based on a schedule of costs or budget of preset expenses incurred during a specific period of time.
CONTRACT REQUIREMENTS | |
Original Contract | * Itemized listing of allowable program expenses to be purchased with each line item allocated to compensation or reimbursements. * Schedule of payments including date of payment, amount of payment and frequency of payment (weekly, monthly, quarterly, etc). * Expenditure reporting requirements * Payment adjustment conditions NOTE: Total calculations must equal total DHS funding. |
(A revised schedule of payment is required if any action reflects change in funding, rates or contract period.)
GENERAL INFORMATION
Contracts with the private sector with a total (compensation plus reimbursable) exceeding $25,000 must be reviewed by Arkansas Legislative Council.
Contracts between state agencies with a total (compensation plus reimbursable) exceeding $25,000 must be reviewed by Legislative Performance Evaluation and Expenditure Review (PEER) Committee
New contracts with previous providers do not require DHS 1951 if rate increase is based on competitive procurement.
New contracts with new providers do not require DHS 1951.
Amendments to increase rates must have a signed DHS 1951.
NOTE: REFER TO SPECIFIC PROGRAM DESCRIPTIONS FOR ANY ADDITIONAL BUDGET REQUIREMENTS OR DOCUMENTATION TO BE MAINTAINED BY THE PROGRAM AGENCY
APPENDIX C UNIT RATE CALCULATION
Examples of unit rate calculations are presented below. Case Number 1 - Average Daily Attendance
Example: 40 clients
Example: 250 days
Example: 40 clients x 250 days = 10,000 client units
Example: $24,630.00
10,000 = $2.46 unit rate
Case Number 2 - Average Units Per Client
Example: 200 clients x 50 units = 10,000 client units
10,000 = $2.43 unit rate
Case Number 3 - Transportation Based on Trips Provided
Example: 146 one-way trips per day x 250 days = 36,500 units of transportation
Example: $23,780.00 total transportation cost
36,500 units of transportation = $.65 cost per one-way trip
Case Number 4 - Fixed enrollment (example, day care services)
Example: 30 clients x 250 days = 7,500 client units
7,500 = $5.50 unit rate
APPENDIX D DEPARTMENT OF HUMAN SERVICES CRITERIA FOR COST STUDY METHODS FOR DETERMINING FIXED RATES
There are two types of fixed rates:
Following are the two allowable methods for determining a Standard Flat rate or a Range of Rates:
A full disclosure budget shall be developed for the service agencies in the geographic area defined.
Unit rates shall be established using historical client data.
Complete copies of all budgets used to establish the standard flat (fixed) rates or ranges of rates shall be submitted to thedesignated executive staff within the DHS program division/office for review and approval along with the general cost study information as shown below.
Service agency audits for the geographic area defined completed no earlier than twelve months prior to the date of the cost study shall be submitted to document unit cost. The audit shall include certification of the cost and number of units of client services delivered.
Complete copies of all audits used to establish the standard flat (fixed) rates or ranges of rates shall be submitted to the designated executive staff within the DHS program division/office for review and approval along with the general cost study information as shown below.
NOTE: Room and board costs must be separately identified.
GENERAL COST STUDY INFORMATION
NOTE: Only allowable costs, as outlined in the applicable OMB circulars, can be used to determine fixed rates. Rates will (may) be adjusted if unallowable costs are used to determine fixed rates.
016.14.05 Ark. Code R. § 005